Joe:  Welcome. This is the Real Estate Investing Mastery Podcast. Hey, what's going on, guys? Joe McCall. Welcome to the Real Estate Investing Mastery Podcast. Glad you're here. Got a good friend with me on the show today. His name is Mike Hambright. A lot of you know him. He's been doing podcasting for a long, long time. He used to call his podcast, The Flip Nerd Podcast. Is that what you still call it, Mike?

Mike:  No, and now we run under the Investor Fuel brand. We actually have a couple of shows, but under the Investor Fuel brands.

Joe:  And you probably changed that like five years ago and I just noticed or something.

Mike: I changed it about three years ago and I've been podcasting almost as long as you. I always kind of say that when I started, there were like only six or seven pod real estate podcasts in the world, really. And you were one of those interesting long time ago.

Joe:  Yeah. And I was just looking at my podcast feed. I last talked to you on this podcast five years ago. So I think this is the third one that we've done together.

Mike:  Okay. But I can't believe it's been that long. Obviously, we talk way more regular than that, but just not in a podcast format. So yeah, I can believe it has been that long. Yeah. Awesome.

Joe:  Well, a lot of people don't know you. I'll just give you a quick intro. Then you can give us a quick intro of yourself if that's all right. Mike has been in the business a long, long time. He used to own a very large, successful franchise. Doing deals, doing lots of real estate deals. He sold that franchise and has been kind of doing his own independent thing ever since. The great thing about Mike that I like hanging out with him is I'm always asking him like, what's working today? Right? Like what's what's working? What's not working anymore? And he leads a very successful mastermind called Investor Fuel. And he networks and leads some of the most successful investors in the country that are doing a lot of deals, house deals, land deals, commercial deals, Fix and flip, buy and hold, you name it. Mike has been there, done that. He's done a ton of deals himself, still does real estate today, but he also leads other groups of investors. I wanted to get him on and talk about kind of what he is seeing that's working today in the market, but more specifically, drilling it down into, all right, so we've got a lot of people that are doing a deal here and there. They're doing one deal a month, one deal every couple, three months, and they want to scale, but they don't want to go crazy, right? They don't to hire a huge staff. They don't want to spend tens of thousands of dollars a month on ads or marketing or PPC or whatever. So like I want to ask him some questions on what it takes to today to be successful and scale in this Market that we're in right now as we're recording this April 2025, right Mike Thanks for being on the show talk a little bit about how you got started in real estate Give people a little background on you. Would you?

Mike:  The relatively short version started in 2008, and I was kind of a corporate refugee. So I worked for a huge company that everybody would know that doesn't exist anymore. It was a $5 billion company that I basically got fired, but it wasn't really, you know, it was just because of my proximity. My boss got fired. And then they're like, well, you're kind of part of that regime. So you're going to go to Accenture. Was it Enron or Worldcom? No, it was, I guess it doesn't, it's not around anymore. So it doesn' t matter, but Radio Shack. Oh, wow. And truthfully, this sounds a little weird when I say this, but it was really a dream job. Like it was just, I was in a very, very unique role. I worked directly for the CEO of the company. In fact, to this day, he still invests in my deal. So that was a whole lifetime ago now, kind of hard to believe it's been that long. And then I went to work for a startup that was kind of flying high and we're doing really well. It was amazing. And then they were about to file for bankruptcy after going public and have an amazing couple of years. And then at the time, my son Jake was born like two months earlier. And so I was like, they're about to file for bankruptcy. My wife was making more money than me in corporate America as a consultant. And she had left her job to have our son. And so we went from like, you know, a couple young married couple doing well to like no income, no idea how to be parents living in a far off land. Cause we had moved from Dallas to Washington, DC for this last role. And it was just as like a wake up call of like, no matter how hard I for somebody else, I don't really have control over my destiny. And that was really the beginning of getting into real estate and I had no idea what I was doing you know initially we were trying to buy stuff off the MLS we had no idea we were doing and then eventually kind of figured out you know how kind of wholesaling works like essentially how to find wholesale real estate. That was 2008, that was 2008. Summer of 2008, basically, when we first started. Yeah, so, and you know, a lot's changed since then. Like I, you know I was a real estate investor. When after I flipped about 100 houses, I started doing coaching. Then next thing you know we have a rental company. Next thing you now we've got. Just things kind of get bolted on as, as that's just kind of tends to work, right? You go down all these paths and it wasn't planned out. Would you come to all these forks in the road and you're like, okay, yeah, let's do that or, you know, and some of that stuff has disappeared. Like some of the stuff we tried, let do that. And then we're like let's shut it down.

Joe:  Yeah.

Mike:  But you got to try stuff, I guess, to see what sticks.

Joe:  Iget it. Yeah. All right. So you started a mastermind called Investor Fuel. Yeah. And you've got investors, you know, all of them have done deals or doing deals, right? So you have your hand, your finger on the pulse, I think pretty well, more than most people. That I've had on my show of what's working today across the country in different niches, in different spaces and different verticals or whatever. This is a really broad question, but like, where do you see the market right now for real estate investors specifically in the single family home industry specifically.

Mike:  Yeah, I mean, it's been a challenging a couple of years for sure. I think that, but there's some people that are just doing really well right now. They, and those people tend to be the people that didn't get shiny objects syndrome over the past couple of year and say, this is really hard. Let me go do something else. They just doubled down on doing what they do and doing it. Well, maybe got leaner and meter and got pulled back into the business. In my mastermind, we have about 150 members and we have different groups based on kind of volume of the business, but our average member is probably doing between 50 and 75 deals a year. So yeah, not, this is not for new investors for sure. And so those that have kind of, you know, doubledown on, on the business have tended to do really well. And those that didn't slash marketing necessarily, right? Like I think it's, it's common. I also run an agency. I run a marketing lead gen company for professional real estate investors. So I'm a little biased, but I'll tell you that I believe this long before I owned an agency was that the last thing you should try to is to lead gen if you're cutting back on your business like that's because that is the fuel that fuels your business and so a lot of people that's the first thing they cut especially if it's a big expense because it just seems like I can make this decision and slash my expenses and kind of you know reduce kind of burn on your or drag on your businesses but the reality is you don't feel it right then and sometimes people like yeah I cut my marketing and you know things are still going pretty well and he was like yeah but let's talk in six months. When, when that sales pipeline is dried up and you have nothing coming in.

Mike:  So, so I'd say what's, what's working now are people that kind of stayed laser focused and people that did not slash their marketing, maybe they adjusted it. Maybe they started to take a little more seriously and look at what channels they can move money around, like take money out of and put it in too. But that's really what's been working well. I mean, if you think of like what's going on, this is, this is kind of how I describe what's going on in this market is. Honestly, probably at least half of the houses that I bought over the years were from people. So these are rough numbers when I say 50-50. Half of the deals are from people that were truly in distress, death, divorce, inheritance, tired landlords, people like that. And then the other half was just from people who just wanted the convenience. Their house was probably distressed, but they just wanted a convenience of an easy sale and they wanted to move on, right? And that second half there are usually people that needed another house. They needed to sell that house to move into something else. And now with interest rates where they are as compared to where they were, those folks are just holding tight. So the distress cells, the, you know, death, divorce, inheritance, and all those entire landlords, like those are still happening because the people just needed to get out, right? Or somebody died, like they don't need a house anymore or somebody inherited a house or it's a landlord that's not their primary residence. So they're like, let's get rid of that thing. I'm tired of dealing with this, but the convenience sales are way down because those were kind of primary residence folks that still needed a primary residence.

Mike:  So in a nutshell, there's still a lot of activity happening, but it's not as much. But that doesn't mean, you know, a lot times like a lot stats you look at, I just looked at somebody's, we're sharing stats like Collin County, which is kind of in the DFW area here. People are like, oh, Collin county is collapsing. I said the median price point, the median sale was down like 5% year over year. But that didn't mean that all sales prices are down 5%. It means the median and price point of the house selling like people could have just pivoted to cheaper houses right so stats are always a little bit wonky so even if volume is cut in half lately well competition has been cut by more than half so there's people that are able to do well they just took a bigger slice of the pie that was out there

Joe:  Yeah, what's interesting is when it does seem to be when the market is shifting and changing. There are, people don't realize this, there's a lot of people that have left the market, the real estate investors market. There's a lot of people that are not marketing for your deals anymore. When it's gotten tougher, it's like, you see this, this is easier to track with realtors, right? Cause you can track how many licenses are active. You can track on how many license. Go down or getexpire. And you can check how many new people are getting their real estate license, right. And you see the swing on every time the market goes up and down. When the market's really hot, there are tons and tons of realtors. And then when the market it goes down, there's very few realtors will guess where the money is being made. The realtor specifically, I'm thinking of this because it's easier to track those numbers then. Wholesalers, you can really see huge swings constantly. And I think we're coming out of, at least for the last year or two, we're going out of this intense competition from wholesalars, from every different YouTube university that was out there teaching wholesaling, right? They're just not doing it anymore. And it's easier to do deals I'm finding now than it was before, as long as you're focusing on the right things, which is marketing and filling your lead pipeline, right.

Mike:  That's right. Yep.

Joe:  And one of the things I was thinking about this too, is you look at like, and I've not done this. I've seen other people show me the stats, but you look at the Google search analysis of how to wholesale a house or how to find good deals. The search volume for those types of things on YouTube and Google are way down. I bet. There's just not as many people looking and trying to learn how to do that. And I've talked to people with really huge YouTube channels and they are kind complaining that the views that have real estate investing beginner type of YouTube channels, right, they're kind of complaining that the viewership has gone down from where it was a couple of years ago. So you're seeing a lot, yeah. You see a lot of new investors, fewer, a lot fewer new investors coming into the market right now, because it's just gotten hard and they're going to go back to doing what they were doing before.

Mike:  It's interesting though, cause you know, I started in 2008 and everybody was running away from the market and the truth is, is it was an amazing time to get in the, the other truth I'll share is we, we just got lucky. Like we didn't plan that wasn't planned. Like a lot of people are like, man, what a great time to get in. I was like, we were just at a point where we were back against the wall. Like we got to do something.

Joe:  Well, and you were lucky because you were in the market.

Mike:  Right. Well, I'm saying we, yeah, we, our first year doing, I mean, we had no prior experience. We flipped 65 houses in our first, but which is unusual, but we were, you know, it's, it's a combination of a few things. A lot of the competition had gone away and we were just, you know. We kind of ran it a little more like a corporation just because that was our background. So we had some, you, we kind of went bigger, went home tight with a go, let's go bigger, go home type mentality. And, and we just didn't have at that point, You know, in the market, there were a lot of bad practices. A lot of people had, you know, bad buys, bad inventory, a lot of the lending had dried up. A lot things were bad for people that had a history and we had no history. We were like, we were like virgins, you know, coming into the market and we didn't have those bad habits yet. And we didn't have these preexisting conditions about how it used to be. Cause we were new.

Joe:  Well, I remember those days too. I kind of got started part-time in 2006 and then full-time in 2009, but I remember those times because there was at the time a blog, a forum called Flipping Homes. I don't know if you remember that, flippinghomes.com. And at the time Flippin' Homes was as big as bigger pockets. Like that, it was the big thing that everybody went to. And that was before Facebook groups even. But at the time, I remember people complaining about, in 2008, complaining about the banks aren't lending any money anymore. There's a lot of motivated sellers, but there's no buyers that are looking to buy these deals anymore. And how can you fix and flip when banks won't lend money? All this stuff. And you could find something to complain about in any market, whether it's going up or down, flat or sideways. You know what I'm saying? No doubt. And I remember back then too, so vividly, there were some people, and if you were active in these masterminds and these. Networks in these groups, like Flipping Homes, there were people doing deals there. They had changed their approaches. I mean, what was working maybe a year or two ago when the market was screaming white hot, maybe wasn't working as well now, but they pivoted. They pivoted and they were doing things a little differently and they we're focusing on the fundamentals. And I remember this so vividly as well.

Joe:  The people that were doing a lot of fix and flip, the people that were doing a lot of rehabbing and had a lot of debt were getting killed because they had a lot of inventory they couldn't sell or people that had a lot of rental properties were getting crushed because they were having a lot of vacancies and a lot of these short-term mortgages that they had were getting called to do or like- That's right. Banks were going to run them, yeah. Yeah, the loans were like, there were short- term adjustable rate mortgaged, some of them and the rates were going up. But anyway, regardless, I remember this so clearly too, the people that did well during that time were the ones that were focusing on wholesaling, just getting in and out of deals really, really quick. And they did a lot of marketing. They made, they focused on acquisitions. They focused on marketing and making offers. And the other thing I remember too, that one of the reasons why the people that did do well, it got hard to get financing from the big traditional banks, right? The Washington Mutuals, countrywide those, right? But they found local banks that would finance deals. And so they would actually, because financing got hard, they saw a problem, they went and fixed it.

Joe:  Andso when they wholesale houses, they would provide the financing with it. They would provide, they found a house that needed a bunch of work. They got it under contract from either the banks or from sellers or whatever. They would go to their local credit unions, the local regional banks and would say, hey, if here's a deal that we are gonna buy for this amount of money, it needs about this amount work. We think conservatively after you sell it, it'll be worth this, whatever. Would you lend money on a deal like this to a rehabber? And if they say yes or no, whatever, great. Then they would say, what are some of the qualifications you would need from somebody to lend on this deal? And they would said, well, we would need somebody that has this and this and this. So then they would go and market this property that says, hey, here's a three bedroom, two bath, 1500 square foot house that needs 50 grand of work. Financing is included to this kind of a buyer. And they will package these deals together for these buyers. And these wholesalers that did this we're killing it at this time and we're doing tons and tons of deals because they found the pain that was going on in the market that was at that time. They did a lot of marketing, they made a lot offers and they brought solutions to the people. Does that make sense?

Mike:  Yeah. Yeah, for sure. I mean, that's, I mean interestingly enough, Joe, we primarily were fixing flipping during that time, but I'm also in the Dallas market. And so while Texas is kind of red hot now, it was, it really never hit as hard as some other markets even back then. So I'm about to share something interesting with you, Joe. If I don't say so myself is even back in 2008 to 2010, when we were flipping houses, it pretty uncommon that we would have a house on the market and not under contract. We would them on a contract typically in seven days or less. And you know, but the, here's the reality is we were able to buy a 50 to 60% of ARV less repairs at that time. We over rehabbed everything and we would sell it like right at where the market is, like we, you know what, we put out a better product at, at a fair price. And we, we just inserted ourselves. I like to say, you, there was a, there, there might be 90 days of inventory in that mark in that neighborhood, right? But we just found a way to always insert ourselves first in line. Like we're next. You know and so stuff would be still a marketplace. There's still a market everywhere. It's like, how do you build a better mousetrap is the question.

Joe:  How do you find out what the problems are that your customers are having? And in this case, as wholesalers, most of us are wholesalars, our customer is the buyer, the fix and flipper, right? And so what are the problems they're having? Or maybe the retail buyers that are buying these houses. The problem they're have is getting financing maybe, Interest rates are too high. What if you could find creative ways to sell your deals with the financing already in place? Or a way that you could offer some, what do you call them, buybacks or incentives or something to get the rates to come down. You know what I mean? So, and you learn that kind of stuff by not hiding in a corner, but by networking, getting involved in masterminds and listening to what's going on and finding out what's working today.

Mike:  No doubt, yeah.

Joe:  Yeah, okay, interesting. I remember so vividly too at that time, because I was trying to do buy and hold and I was tying to do rehab, fix and flip at that in 2008 and nine. And I had a bunch of rental properties that were hemorrhaging cash. And I remember feeling like, I need, I think the most important skill to learn, I remember thinking this, the most skill to learning real estate investing is how to find the deals. How to find deals and how to wholesale, like how to get good deals and then sell them immediately. Because at the time, It was easier, it was smarter to make a quick nickel than a slow dime.

Mike:  Yeah, yeah.

Joe:  Because when there's times of uncertainty, the faster you're in and out of a deal, the less risk that you're taking on. And I'm wondering if we're coming into a market right now, maybe, maybe not, who knows, where there's a lot of uncertainty and things, people are freaking out, stock market's going crazy, tariffs, whatever, you know, maybe it's just hype and hysteria, but it's really good to learn how to hedge your risk and protect yourself, right?

Mike:  Yeah, if you can generate, I do think that is, I think the two biggest skills are lead generation and. Sales like acquisitions right if you're good at those things and you buy can write you have options at least like for a lot of folks that don't know how to buy right or if they buy from wholesalers are off the amounts are at the auction or whatever with a generally paying higher prices like is what you can't let go double wholesale that like you're not gonna sell it again typically so you're stuck only being a rehab or keeping it as a rental and so you know the deeper you can buy the more options you have right.

Joe:  It's funny too. I remember it was in 2007 and eight when my, I was hemorrhaging a lot of cash and I, I just. I joked that I was a professional student for three years and I bought course after course after course and just kept on spending more money on my education than I was making. But I did decide, I'm going to buy one more course and I'm just going to do what the guys tend to do. And it was Chris Chico, mutual friend of hers. Oh, wow. He had a course called Absentee Owner Profits and it was all about how to buy lists of absentee owners and send ugly postcards and then send them to a voicemail and then call them, talk to them and send them an offer. But at the time, I remember complaining like, oh, man, there's too much competition. Like everybody's doing direct mail, right? These sellers, and they were, the sellers were getting a lot of postcards at the time. And I was targeting the most, the biggest. Easiest to get list that everybody else was targeting absent to yours or tired landlords, you know, but guess what it worked It actually worked even when at the time maybe there wasn't as much competition as there is today I don't know but there was a lot of it and it was I owe a lot to Chris because he really opened my eyes to The importance of marketing and I realized at that time we're not in the real estate investing business. We're in the marketing business

Mike:  Yeah, for sure.

Joe:  Andleads are the lifeblood of your business. No doubt. Will you talk a little bit about like, what are you seeing that's working today for marketing? PPC, direct mail, things like that.

Mike:  Before I get to that, did you know, I would love it if he was watching right now. Did you hear about Chris Chico's new training program about Facebook ads or digital? Oh, the one that's a how to properly wear a man bag. Don't, don't cut it out.

Joe:  If you're watching this, you do need to explain yourself a little bit. You, you wear that too much and you wear it too tight around your chest. You know, you need to lose some pounds because it's some things are like coming out of your shirt that we don't want to see. We'll just lose the man bag really. And the man boobs.

Mike:  Right. So we got to make a short from this and share it with Chris. So yeah, you know, from a marketing standpoint, I think, you know, every, I'll say every channel works, but I'll I'm obviously partial to inbound leads. So what we've got, we've got plenty of information to show that inbound lead. So mail, pay per click, SEO, TV, like those leads tend to have profits that are two to three X higher than outbound texting and cold calling. And those things are struggling texting is like, you know, going away quickly, cold calling is still a struggle. But you know if that's where you're at in your business and you have to hustle, you have to kind of put in some swag and sweat equity to get to that next level, that just is what it is. Like you know I'm not a fan of those things but if that where you are at and that's what you have do to get ahead then that's just a, it's the season of hustle you have get through, right? But ultimately when you can pay for marketing and leads come to you, proverbially while you're sleeping, right. Then that is the way to kind of scale this business. Otherwise it's a job, right? If you kind of overlay the real estate investing business, like what investors are doing, how hard they're working with Robert Kiyosaki's cash flow quadrant, you know, it's like you're an employee, then you're self-employed. Then you're a business owner that has systems and processes and a team in place, but you're probably still working in the business. Then the lower right is your money is working for you and you don't have to lift a finger, right? And that's where everybody wants to get to. But a lot of people get stuck in that self-employed box where they own a business, but the business really owns them, you know, ultimately. And that the saves that everybody has to go through, by the way. So if you're there and you're listening to this, like, Hey, it is it, that's just where you're at, but don't get stuck there unless you're aware you're stuck there and your okay with this. Some people are actually okay with that, but I think a lot of us aspire to, that's why there's a lot people that churn out of the business after three to five years, they just get burned out, but it's because they got stuck in basically a job.

Joe:  So the inbound marketing, I find that so true that the quality of the lead from somebody who's calling you back or calling you and you're answering the phone is so much different. And it does cost more per lead without a doubt, but you kind of get what you pay for.

Mike:  Yeah, you can. I will say the conversion. I mean, on an inbound lead, you might convert, you know, it depends on the channel, but it might be one in 15 you're converting. On outbound, if you know nobody really knows how to define what a lead is in the first place, but even the way that most people would define it, maybe it's one in 50 or one in 100 that you're going to close. So, you know. Yeah, the leads are more expensive, but I actually say this all the time. The cost for lead doesn't really matter at all. Like what really matters is, you, know, a phrase that you and I would know better than most in this industry is ROAS. Is like, for every dollar I put in, how many do I get back? Return on ads, right? And direct mail.

Joe:  I love direct mail. I do direct mail every day. I sell, I use and sell software that does direct mail, I love direct mail I just taught a class Mike recently on how to send outbound direct mail about five or 10 letters a day in certain hot markets. You find a property, you send the seller an actual offer, giving them like two options, a cash and owner financing offer the cash is that. You know, this price and owner financing is a little higher price. And so I have students and clients that are actually doing it. And guess what's going on. Like I could tell you that I'm doing it, I'm getting deals. People just don't believe me or they just don't care. Probably both. But when I have people that are doing this now and actually seeing results, one guy in 30 days got four deals under contract. He would just five days a week, he would send five to 10 letters out. Now he's, he's targeting vacant land. Right. But the point of it is… Direct mail works. And the more personalized it is, the reason why it's working so well is because he's handwriting each envelope, you know, and he's sending an offer that's specific to that property that he was looking at. And so it's a very good offer. And he's probably offering more than anybody else because he knows that area so well. I love direct mail. You know, what percent of investors that you see that are doing deals today, successfully, successful wholesalers, successful rehabbers or whatever, that areare doing direct mail?

Mike:  I think for scaled up businesses, it's a really high percentage. The, and the reason is, is you can scale the heck out of it, right? I mean, most channels are hard to scale, even pay per click. It's hard to skill because once you get up to a certain point, like Google or Facebook, it will take all your money for sure, but you're just bidding yourself up because of the auction. It's an auction process, right. But direct mail in the point of, if you're, and it depends on the size of your market you're into. I mean I'm in DFW with 8 million people. If you're in a major market, your budget is probably never, there's probably always room to grow your budget because there's a lot of, there are more houses than you could ever market too, right? But I think that honestly, I think it's probably 70 plus percent of high volume real estate investors are using mail because they have to, like, you just run out of other things to do and mail is probably the most scalable thing. And if you're working with somebody like Investor Machine or somebody like that, Like. It's the easiest thing to do. You basically just send a text to somebody and say, I want to double my budget, right? I mean, it's, there's no effort for you to do it. It's not like cold calling where you're like, okay, we have to hire twice as many cold callers and then half of them are going to quit within 30 days. So I got to keep recruiting them and hiring them and training them and turning them out and I never have enough data and I always got to keep refilling the systems and stuff like that. I mean you're not, you know, if you're working with somebody, you don't have to do anything besides decide and write a bigger check ultimately.

Joe:  Yeah. All right. Let's talk about the person who's already doing one or two deals a month, one or two deals every two months. And they want to scale, right? We have a mutual friend, I won't say who, but he wants to write a book that's called Should I Scale My Business or Slit My Wrists? That's it. Because he's tried scaling, that's not funny, really. But if you know the guy I'm talking about, it is. You want to skill the business, you want to grow, you want make more money, without all of the pain and the hassle and the nightmare that goes with that. Because as you scale, your overhead grows, you have more people. So, what are you seeing people that are scaling successfully with low overhead and high margins? What are they doing?

Mike:  Yeah, I mean that those are a little bit of a contrarian like words, right? Is like most people that scale their business up have to add in more marketing and more people to do that. But they're, if you think of it as like a stair step, you know, whether you're doing land or our houses, you could be a solopreneur and do two or three deals a month, like without it being a total nightmare, right. But to get to three to five, you know, every time you take that stair step up, you have to invest more money in people and marketing. And at the beginning of that, it's an investment that hasn't paid off yet. So you have to wait for it to catch up. So that's why if you're going to do more than three, well, you might as well do five to seven, right? Because you have overcome your fixed costs. And there are a lot of fixed costs in the business. I mean, if you have an office or you have an admin, like you could probably do five to seven deals a month, depends on whether you're wholesaling or doing land or fix and flipping or whatever a little bit. But you could do, you know, seven plus deals a month with one admin, right? But then after you get over some level, maybe it's seven, maybe it 10, now you need another admin, but if you think of like all the costs in your business, you wanna just kind of sweat the fixed costs, like try to operate where you're using those fixed costs at full capacity, where your only incremental expense is advertising. And, you know, maybe additional people or in our, in this, in our business, it would probably be an acquisitions person that's variable cost anyway. And so you want to try to like basically just kind of sweat your fixed cost. I mean, that's how, you now, I'm going to go off on a tangent a little bit here, but that's a lot of factories work. If they have excess capacity, then they start producing, let's just say it's like, you, know, canned vegetables or something, right? So they have extra capacity. So then they start doing private labels. The margins are smaller, but they just want to keep those machines running 24-7 because they're already paid for for the most part. The variable cost to run those is not very high, and it's the same thing in our business. You want to try to sweat your fixed expenses to the edge of where they're fully maximized. It's a little academic, but in my view, that's how you scale. You could have a nice life by doing three deals a month if you keep it lean and mean, But if you really ultimately want to buy back your time and not be stuck in the business like every single day, you've got to get it up to a level where you can afford to hire competent people and afford to spend money on outbound marketing that will allow them the machine essentially to run without you having to have a heavy hand and everything.

Joe:  That'sreally good. I played golf yesterday with a guy who is a successful businessman and wants to, he tried doing the, I call it scale bros. He wanted to go do scale brose and get real big. And he had a huge team of VA's and he was taking on a bunch of clients and stuff like that. And, he just found out that he hated it. He hated the stress. He was making a lot of money, but it just wasn't worth it. And so he decided, you know what, I'm just going to scale down. I'm going to keep it small, keep it all. And he is doing very, very well now. I mean, he has nothing that he can brag about. I mean in a certain sense that he is not making a ton of money that's gonna make you impressed and say, oh wow, that's awesome. But if you look at how many hours a week he's working and you're gonna think. Man, that's pretty cool, actually. He's got it really easy. Like maybe he went from making 750 grand a year to making 200 grand a day right now. But his profit margins went from maybe 25% to 75%.

Mike:  Sure, yeah.

Joe:  So he's actually keeping a lot more of the money and his hourly rate is way better now. So like, obviously this is different for everybody, right? Can you make, let's just, can you gross 500 grand a year with just you and maybe one or two other people doing, let say, wholesaling?

Mike:  Oh, for sure. Yeah. I think you, and you might be working a lot, but you just, and you got to have, I think he you want to have really good people that can shelter and I listen, I've got across my businesses. I probably have, we probably have 75 virtual assistants that work for us. So I'm big. And then, and I'm talking about, you know, a lot of entry level administrative folks and then even some high level, almost like executive level overseas folks as well. But I know you're big on VA's as well, Joe. So there's a big difference between those that come in and try to get the like absolute lowest cost VA and the person that's twice as much that it's still really, really cheap, but the quality level is the equivalent of, you know, paying somebody in the year in the U S 30 or 40,000 a year versus 80 or a hundred, right? It's like, so it's still insignificant. And the grand scheme of things like cost wise, it's, it still pretty cheap, but like always just go at the end of the day, like as a business owner, you have to know, like I'm trying, you're trying to get people that save you time. And like, if you value your time enough, you should be willing to pay more for that because your time is the most valuable asset you have. So how do you find really good people to make your life easier? But yeah, you can stay lean and mean. There's a lot of us that are just on that front to build something bigger. I was talking to somebody recently in one of my podcasts and they were just like, it's kind of this innate like thing deep inside of every, he was talking about every man that they just want to build. Like I want to built something. You're a creator, Joe, I'm a creator. Like that's why we're good friends. We're like always bouncing ideas off of each other, watching what each other are doing right. But we, you could, you could work less hard than you do now and I could too. But it's like, it leaves you kind of empty inside because I'm a builder. I want to create stuff. I want to increase stuff that impacts other people. I wanna create stuff that impacts me and my family. Right. And so, but it just, everybody's different. I like, I honestly, I like to work hard. I liked to work as long as I'm doing mostly what I enjoy. I'm okay with that, but some people would be okay working, you know not working at all and and just living a life with their family and stuff and it's not that I don't want to live like my family I mean I do right but I you know I just find that I like to be in the lab if you will

Joe:  Yeah, yeah, that's good. So I want to talk about, I guess, you've seen guys that are doing a million dollars a year in a wholesaling business. Maybe they're doing a few fix and flips here and there. A million dollars a,year that's about 90 grand a month, right? Is that right? Yeah, about $90,000 a month. What kind of operation does that person need to have in terms of, you know, their marketing budget maybe? And you can use general numbers. The amount of staff, how many dispositions team members how many acquisition team members how much are theyspending a month on overhead or marketing to do you know ninety to a hundred grand a month.

Mike:  Yeah. And we've got some guys in our, in our mastermind that are doing, you know, 800 wholesale deals a year. It's that's kind of crazy. They have, they have a huge operation so that I won't use them as an example, cause they're unusually large. But you know, one of the things I didn't always think about it this way. I'm like thinking about what do I want to make? Like, how do I do what I want? How do I make what I wanna make? It's all about me in the early years. And I think one of ways to back into it is if you were to hire a good salesperson, an acquisitions person, right. That's a really goodsales person and can make your life easy. Like think of like what is the average need to be for that person in your market like maybe a hundred grand i mean you're not gonna find some killer sales guy or woman for like thirty thousand a year you're just gonna find the right so you kind of have to back into your business a little bit and say how do i get the people that are working for me how do I build a business that hits their goals because they're not hitting their goals they're gonna be gone and i want to get pulled back and i'mgonna have to go hire somebody else again keep getting pulled back in if you were to back in to say somebody that you know hypothetically salesperson wants to make $100,000 a year and if they make you know 15% of gross profit then you have to figure out well how much in gross profit is my business need to do to make that person happy right and happen to have a calculator here so let's just do the math if I said that they want to make a hundred thousand dollars a year divide that by 0.15 which is 15% that means they have to generate for the company about six hundred and sixty six thousand six six, six number, Joe, don't want to freak you out.

Mike:  But let's just say they need to make $700,000 a year for the company to have $100,000 ofyour person. So said another way, if your goal is to make a million dollars a year, you might as well shoot for someone that's gonna make 1.2 to 1.5, so you can afford to have two salespeople. And there's always this kind of thing about salespeople is like, if you have one, you have none, because you do lose people a lot, or if they're not hitting the goals, like they're gonna leave, right? And so, I mean, you're gonna keep getting pulled back in as the owner, because you're the CEO and chief bottle washer, right. So if you kind of back into it that way and say, okay, well, to feed $200,000 a year people, I need to be able to operate and generate roughly $1.4 million a year in gross profit for my business. And then you kind back into like, how many admins do I need to support a team doing that? It's probably a couple, right? And so that's kind of how I look at it is like, what's the, if you were like, if you're a football coach, you'd be thinking like, okay, who am I gonna put on the field and who do I and what's itgonna cost, right. I think we often just look at the number that we want and we think, well, if I bring on a salesperson there, you know, somebody might try to bring on two salespeople in a business that their goal is to make $800,000 a year, but that business can't support two sales people. So something bad is going to happen, like, you now, and then on top of that, to continue to use that example is to generate a $1.4 million a year business. How much do you have to spend in marketing? To get the leads you need to make your sales team happy, right? It's like, okay, well, if they need to, these are, this is back of the napkin math. If you said, Hey, I need to have four X row as, you know, so for every dollar I put into marketing, I get four back. Then that $1.4 million business, you need to spend 25% of that, whatever that is, like 350,000 a year of marketing. And that's how I look at it.

Joe:  $350,000 a year in marketing. I mean, you need to think about that. Like if you want to make a million dollars, 1.4 million a year, you need spend over $300,000 in marketing, that's a lot. Most people can't stomach that.

Mike:  Right. Well, I mean, that, that is what it takes to scale. I mean we are talking about, you know, if you do the math on that, that's somebody that's probably netting. If the acquisitions manager cost is 15% and the marketing is 25% now you're a 40 and let's just say other administrative cost is 10%, you're netting half of that. You know, your business is a 50% net business and you're making $750,000 a year, right? You have to spend money to make money.

Joe:  Yeah, and that's why you got to ask yourself, is that the kind of business I want to manage? Are you good at managing people? Are you go to takingthe risks? Let's talk about like, okay, somebody does want to scale. We've talked before about the, what's it called? The EOS, you know, the traction system and all that. You've talked about, you have the investor fuel operating system, right? That's right. Talk a little bit about that. Like what are some of the things that if somebody wants to scale? And they, the thought of them spending 350 grand a year on marketing doesn't scare them. The thought of managing two salespeople doesn't scare them, what are some of the operating systems that they need to put in place to at least start thinking about that stuff in advance?

Mike:  You know, a lot of it is the stuff we just talked about. It's, it's truly planning. It's just like having a plan that makes sense. Right. And then it's like, how much do I need to spend to get here? And you know, if those numbers that I just shared scare you, if there, if you're a solo canoe, or you're doing a lot the work, like you're just trading your time for money, like right now, and that's not necessarily a bad thing if that's what you want to do, but just know that if you were, you know ask yourself this question, if you were to hire somebody to come in and replace you in that business, how would it cost you to But like, I guess how much are you willing to go do what you do for somebody else for? Like if, if Joe said, Hey, I'm hiring and you'd say, Hey I'll come do it. It's, it's $150,000 a year. Lots of your time's worth. Right. And so that's what you're costing yourself. So you may not see it in dollars, but you're seeing it in sweat equity. Right. But yeah, the fuel operating system is just a plan. A lot of these systems are the same. So like EOS it's, where do you want your business to be out of ways five years? What do you what does it need to look like in three years to hit that five-year goal? What does it look like any year at that three-year go and then what do I need to do this quarter and ultimately this day? Or this week to hit my monthly goal and my quarterly goal had my annual So it's just a methodical approach to kind of backing into your vision for what you want to happen and being realistic About the numbers to get there. So in my experience a lot of people have a number like I want to make a million dollars this year But they don't have the team resources or the advertising or lead gen resources to get them there. It's just simply a dream, right?

Joe:  Yeah. Well, it's important to think about that stuff. And if you get intimidated, when you look at the book Traction, for example, like I did, I started reading that thing and my eyes glazed over. I like to read. It's not like I don't like to.

Mike:  That's a hard read. Yeah, that one's a little text booky.

Joe:  Well, then there's another one that was called scale up or something like that.

Mike:  Scaling up, but a good one also by Gina Wickman that does EOS is rocket fuel. So it really helps you kind of identify who you are in terms of being a visionary or an integrator, and it kind of makes it clear that there are people that like you and Ijo are visionaries, right? If I didn't work with my wife in the business that is more of the implementer, like we would have been dead a long time ago, but you know, we're the yin and yang to the business of the person that's cleaning up my messes and doing the work versus me being a missionary and having these big ideas, right.

Joe:  Right. So, so find out who you are, the implementer or the visionary, the integrator or the visionary and go find the other person maybe. But so, you know, scaling is not for everybody. Some people obviously listen to this. They just want to do their first deal. Other people are like, man, I want to scale, but I don't, I wanna make more money, but I didn't want a huge staff and huge overhead. So these are some things you gotta think about. Any advice, Mike, that you think we haven't talked about yet for somebody that wants to go from one or two deals a month to three or four deals a week?

Mike:  I think the biggest thing is, you know, there's a lot of people that kind of just in any business, honestly, I mean, everybody in America, not everybody, but a lot of people expect this immediate gratification, right? They just, I want to do something today. Like, I do it all the time. I'm an Amazon junkie. So I'm like, oh, I think I need something. Order it online. I get it sometimes the same day, often the next day. And I just like that immediate gratifications. And then it shows up. I'm, like, it's one of my vices. I'm on Amazon junky. People like expect to like take a pill and lose 50 pounds or like, you know, I lost all my hair. I'm going to go get a surgery and replace it tomorrow. I mean, you can do all those things, but the truth is, is that's just not how the real world works in terms of entrepreneurship. youhave to be willing to do hard things for a long time to see results and you're not going to see immediate results. And so you have be willing get punched in the nose over and over and over again and keep getting up and keep going forward. And at some point you won't get punched on the nose anymore because you know how to dodge, right? So, I gave this analogy the other day of even the best pro athletes in the country that we all are impressed with, like at one point, they didn't even know how to walk, right? But they learned how to run, then they learned to do the thing they're doing, they learned how to do it to the next level, the next, level, next level. So most professional athletes like started just like you and me, we were playing T-ball or whatever and they just never quit and they kept getting better, better, every day, every year. That's what entrepreneurship is too, like it's hard upfront, but you can't get to, you know, the majors until you get through T-ball, the T-Ball of a flipping land show. How can people get a hold of you, Mike? Yeah, the best way, you, know, obviously they could learn, go to InvestorFuel.com and learn more about that. You can connect with me on Facebook. Those are probably the two best ways. I also run a Legion company called Investor Machine. So you go to InvestorMachine.com and learn about that there. Those, those are the primary ways. Your podcast, what is it called? Investor Fuel. So yeah, if you go to the InvestorFuel.com website or you go to our handles Investor fuel on YouTube or anywhere where you can listen to podcasts, just look for the Invester Fuel show.

Joe:  And I'm going to be on your show soon. Yeah. And then Mike, it's been good talking to you. Investor fuel. I love that. And then you're done for your marketing service is a investor machine. That's right. Check that out and good talking to you, Mike, and you know, I'm gonna be in the DFW area in a couple of weeks, so we should hang out.

Mike:  Yeah, let me know where you're going to be at and what the dates are.

Joe:  Yeah, we'll talk offline about that. All right, thank you, Mike. Have a good one. Take care.

Mike:  Thank you, appreciate it, yep. Have a good day.